In a new report released by The Peruvian Ministry of Energy and Mines (MINEM), it was announced that regional and local governments saw an increase of 60% in mining tax revenues in 2021.
Proceeds from the industry – made up of canon; legal and contractual mining royalties; and rights to operate and penalties – added up to a total of S/6.6bn ($1.67bn), up from the S/4.41bn ($1.11bn) reported last year.
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MINEM reported that mining canon transfers accounted for over $737.44m, a 12.5% increase from the $663.69m received in 2020. Mining royalties generated over $861.53m, a 165% increase from 2020 figures, and income generated from rights to operate and penalties, up to October 2021, accounted for $325.49m.
The report indicated that among the regions that received the most tax revenues were Áncash, with more than $370.5m and a participation of 22.0%; the Arequipa region, with $367.19m, and a share of 21.8%; and Tacna, with more than $159.44m and 9.5% of the total.
The growth in revenues was the result of higher metals prices and increased production throughout the mining industry, leading to a boom in profits that resulted in higher royalty payments.
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The increase in revenue reflects the broader attempt by the new administration to generate greater tax revenue from mining. President Pedro Castillo spoke on his campaign trail of a desire to double the state’s share of mining profits to 70% and use the funds to boost healthcare and education and reduce income inequality.
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By GlobalDataHowever, despite the uptick in revenues, a number of prominent mining operations in the country have been beset by community protests. Late last year, the Las Bambas mine operation was shut down in the face of a road blockade by local residents, who claimed that the dust raised by the trucks that transport the copper pollutes their crops and affects their livelihoods.
Therefore, despite the country seeing a significant increase in tax revenues, a range of other issues remain within the industry, especially pertaining to community relations and the mines’ social profitability.
